Corporate Innovation in the Cyber Age
Publication Date
4-10-2020
Abstract
In this study, we construct and validate a text-based metric capturing firms’ ex-ante exposure to cybersecurity risk and document the rise of cyber threats as redesigning corporate innovation and appropriation strategies. As firms’ exposure to cybersecurity risk increases, managers’ reliance on trade secrets declines, as they seek to protect their firms’ intellectual capital under patent and intellectual property laws. In addition to this increase in patent activity, we determine that firms exposed to cyber threats file for simpler patents to accelerate their innovation cycle. Finally, we show that this strategic adjustment is not costless, as it causes firms’ returns to research and development (R&D) investments to decline significantly.
Document Type
Article
Keywords
Cyber risk, Cyber-attack, Corporate Innovation, Patents, Trade Secrets
Disciplines
Finance
DOI
10.2139/ssrn.3559386
Source
SMU Cox: Finance (Topic)
Language
English
